Asia report: Oil, Fed concerns weigh on markets

Concerns over Fed rates and fresh declines in oil prices saw Asian markets end Thursday in the red, as a number of them ended their week early for the Good Friday holiday.

In Japan, the Nikkei 225 slid below the 17,000 mark, closing down 0.64% at 16,892.33.

The yen let go of the 111 mark it had been anchored to for the last few days against the US dollar, and was last 0.32% weaker at JPY 112.74 per USD.

Most exporters in the country finished down, with Nissan off 0.98%, Toyota down 1.56% and Honda falling 1.6%.

In China, the Shanghai Composite Index closed down 1.63% to 2,960.97, while the Shenzhen Composite Index was down 1.39% to 1,876.11. The ChiNext Index slipped 1.74% to 2,219.77.

Stocks in the People’s Republic sank after Premier Li Keqiang announced that the country was working to address economic volatility, and that Beijing would not deliberately weaken the yuan to bolster exports. Markets pared losses after his speech, but later declined further.

Investors were also cashing in over concerns about short selling, where investors bet on declines by borrowing stock. Broker Ping An Securities said it was going to resume the practice, which was said to be a major factor in last summer’s stock crash.

Before the open, the People’s Bank of China set renminbi’s loose peg at CNY 6.5150 to the US dollar, compared with Wednesday’s fix of CNY 6.4936. The onshore yuan trades 2% either side of the peg.

In Hong Kong, the Hang Seng Index lost 1.31% to finish at 20,345.61, while the Kospi in Seoul finished down 0.46% to 1,985.97.

An appreciating greenback weighed on stocks and currencies in the region. The US dollar gained before Asia woke up after St Louis Fed president James Bullard indicated interest rates could go up in April.

"Expectations of an earlier Fed tightening are now seeping through markets, albeit at a slow pace, with fewer investors willing to place bets on what the Fed say they might do, especially after what they have actually done by pushing back rate hikes,” noted Mizuho Bank early in the day.

Energy and materials shares in the region were also weighed down by declines in oil during the sessions, which managed to slip below the $40 mark. Brent crude was last down 1.86% to $39.73 per barrel, while West Texas Intermediate lost 1.95% to $39.03.

Down under, the S&P/ASX 200 finished the day having lost 1.13% at 5,084.20. It was weighed down by banking stocks, with Commonwealth Bank of Australia down 2.45%, National Australia Bank off 3.53%, Westpac losing 4.58% and Australia and New Zealand Banking Group sliding 5.21%.

ANZ told the market early in the day that it was expecting its first half credit charges to increase by at least AUD 150m (£79.8m), on top of the AUD 800m it had already indicated in February due to exposures to the resources sector.

The New Zealand benchmark’s golden run was again interrupted, as the S&P/NZX 50 lost 0.09% to close at 6,662.55.

Trans-Tasman tender was collectively weaker against its cousin across the Pacific, with the Aussie dollar last 0.39% weaker against the US dollar at AUD 1.3329, and the Kiwi losing 0.31% to NZD 1.4953 per USD.

National Australia Bank senior economist David de Garis noted that the Aussie was bearing the brunt of the selling, amid "weaker commodity prices, somewhat jittery equity markets and hints of a renewed appetite for the U.S. dollar (or at least some selling of the euro and British pound in the wake of the Brussels terrorist incidents)".

Markets in Hong Kong, Australia, New Zealand, Indonesia and Singapore were set to be closed for Good Friday.